Lets translate between newspaper jargon about exchange rates and the economic reality of exchange rates. a. Last

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Let’s translate between newspaper jargon about exchange rates and the economic reality of exchange rates.
a. Last week, the currency of Frobia was trading one for one with the currency of Bozzum. This week, one unit of Frobian currency buys two units of Bozzumian currency. Which currency “rose”? Which currency became “stronger”? Which currency “appreciated”?
b. The currency in the nation of Malvolio becomes “weaker.” Now that it’s weaker, can 10 U.S. dollars buy more of the Malvolian currency than before or less than before?
c. A college student travels from the United States to Germany. Just before he leaves, he changes $400 into euros. He spends only half the money while in Germany, so on his return to the United States, he exchanges his euros back into dollars. However, while he was admiring Munich’s historic Marienplatz, the dollar “weakened” considerably. Is this good news or bad news from the college student’s point of view?
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Modern Principles of Economics

ISBN: 978-1429278393

3rd edition

Authors: Tyler Cowen, Alex Tabarrok

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